Direct mail seems to be having a moment. Everywhere you look – from Forbes and Winterberry Group to Adweek, WARC and Digiday – the volume of articles and reports about the relevance of direct mail are on the rise. A captive audience at home during the pandemic reinvigorated the channel, but there are other forces at play to account for the recent attention.
The media landscape has never been more complex. You might even call it fundamentally fractured as we transition from an era of ascendant pure-play digital ad economics and infrastructure toward an array of addressable, direct and commerce-capable digital media. By creating a new mixed reality of omni-channel opportunities across environments, devices and media formats, this new digitalized media spectrum is more dynamic, convergent and decidedly “phygital.” Winterberry Group’s The Outlook for Advertising, Marketing and Data 2023 Report, what we are seeing is not a cyclical shift in media, but a secular one.
As more companies look to adopt direct-to-consumer (DTC) strategies – upward of 80%, according to Kantar – and reorient toward first-party data, the digital transformation of marketing seems to be a foregone conclusion. At the same time, the abundance and maturation of DTC brands and channel strategies are increasing the need to diversify channels, adopt omni-channel strategies and cross the online divide. One-to-one commerce is oriented toward a non-linear customer experience and toward how things get to people, which is creating hybrid models that bring physical and digital channels and environments together.
This post-digital shift has a lot of factors at play, including:
- A shift to one-to-one commerce and DTC strategies
- Changes in media and targeting practices
- A renewed interest in in-real-life (IRL) media
- Commerce media that’s blurring marketing, shopping and sales
- AI and automation integrating channels, data and content
- More reach plus addressability options
Net digital growth is slowing, with gains coming from a greater array of digitalized media channels like connected TV (CTV), digital audio media, retail media networks, affiliate, SMS, gaming, experiential/events and IRL media like digital out-of-home and cinema. Divides between online and offline, traditional and digital are feeling out of sync with the new channel landscape representing a spectrum of plugged-in, addressable and dynamic options that create a framework for solving multiple problems and achieving many different goals throughout the customer journey.
In this new pluralistic ad environment, online and offline, DTC and ad-supported web models, reach and addressability, and precision and scale all coexist. This creates new opportunities and highlights growing pains as marketers wrestle with channel investment decision making.
Just as solely investing in RRSPs is no longer the solution to retirement planning, dumping all your money into digital advertising is no longer the safe solution it once seemed to be. Digital advertising is dealing with a lot right now: inflation, depressed performance, social media engagement levels, bot fraud, cookie replacement and data privacy, measurement and environmental impact.
These have made once-trusted digital channels far less reliable and more expensive. Look at these year-over-year CPM increases, according to Winterberry Group’ s The Outlook for Advertising, Marketing and Data 2023 Report:1
- 61% increase in Meta
- 185% increase in TikTok
- 75% increase in Google’s programmatic display
- 23% increase in Instagram
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In the “dark”
An interesting byproduct of the changing landscape is the renewed interest in the topic of “dark social” (now expanded to include terms like “dark funnel,” “dark traffic” and “dark direct”). The term is making a comeback amid questions of data privacy, tracking and traffic source.
Originating with Alexis Madrigal’s article “Dark social: We have the whole history of the web wrong” from The Atlantic in 2012, the term describes the inability to track traffic source from peer-to-peer sharing in closed and private channels like email and instant messaging.
At the time, Madrigal suggested that about 69% of traffic came from dark social. Today, dark social is estimated at between 69% to 80%, depending on country and topic, according to MarTech. All told, 90% of consumers say they share privately, not publicly.
As a marketer, you want your brand talked about and content shared (privately or publicly) – peer-to-peer sharing is critical to lifting business effects (particularly when it’s done publicly), but these numbers show that’s not as easy to achieve or track as we once thought.
In a post-cookie online era, in-app engagement has become more frequent and channel “directness” has increased. That means peer-to-peer sharing will also increase as more interactions occur in closed and private environments for consumer and business audiences. This has implications for media planning; how visible the business effects of channel influence are across paid, earned and owned; as well as how well budgets are aligned to where people are influenced.
Today, amplification of paid efforts is not only desirable but essential as more ecosystems are anchored in direct and owned channels. A new dynamic between channels is creating more opportunity to think about which channels are essential (core/anchoring role in scale, attention, engagement and trust); enabling (creating connection, conversion and utility); or energizing (creating cut-through and buzz and amplifying exposure). Ported over to media design, these customer experience design principles provide a way to think about channel planning for a mixed reality of media directness.
Direct mail ranks
Right now, direct mail provides a salient opportunity to shift the landscape while reducing performance risk and offsetting digital inflation and instability. The channel’s addressable size and postal code data make it the largest and most precise in Canada. And while digital media is starting to address environmental sustainability, direct mail already has a decades-long head start.
Need further convincing? Let’s cut directly to research.
Direct mail sees a spend increase
In 2021, direct mail saw a 10.4% spend increase, accounting for US$41.9B, according to Winterberry Group.2 Although direct mail only grew 1.6% in 2022, it maintained the 2021 spend spike and had the second-highest non-digital spend of all channels behind only linear TV. Already the fifth-highest overall spend (search, linear TV, paid social and digital video), direct mail is also the third-highest growth channel behind addressable TV and experiential/sponsorships.
Direct mail performance in Canada
In Canada, direct mail revenues grew 14.4% in 2021 and another 5.3% in the first 3 quarters of 2022. Historically, the United States has had stronger media diversification than its neighbours to the north. Canadian marketers are more digitally invested and far more sensitive to perceived investment risk, which leads them to deeper and faster cuts than marketers in the U.S., according to a Standard Media Index analysis. This makes direct mail performance in Canada even more impressive.
Direct mail continues to grow
Direct mail is the only physical media channel left growing and the only physical channel in the mix of direct channels and media data services.
Direct mail delivers
Nearly three quarters (74%) of marketers agree direct mail delivers the best ROI, response rate and conversion rates among all channel options. They also agree direct mail is a more effective channel for their company than email, according to 2023 The State of Direct Mail report by Lob and Comperemedia.
Direct mail continues to perform
Direct mail is one of the most underestimated channels by marketers when compared to the evidence of performance against the top-5-ranked media attributes – increasing brand salience, targeting the right people in the right place at the right time, triggering a positive emotional response, increasing campaign ROI and maximizing campaign reach – according to Ebiquity’s 2020 research, Re-Evaluating Media for Recovery.
Direct mail is trusted
Direct mail is among the 3 marketing channels consumers trust most when making a purchase decision – trusted by twice as many consumers as online display ads, according to MarketingSherpa.
Direct mail scales and diversifies
Two thirds of mailers entered the direct mail channel in search of scale or growth, followed closely by a desire to diversify the marketing mix. Over half of the respondents chose mail to escape the rising acquisition costs of digital channels, according to SeQuel’s 2020 Direct Mail Benchmark Report.
Digital-to-direct mail solutions
Demand for digital-to-direct mail solutions is increasing as digitally native DTC brands seek to retarget customers with physical mail media. In the United States, the spend on programmatic direct mail campaigns is forecast to grow at a +27.4% CAGR through 2026, according to Winterberry Group46.
As more brands elevate direct by adding DTC strategies to their market-approach creativity, customer experience and relationships become integral to break through and grow. Direct mail is delivered to the home, which is increasingly essential to influencing decision making and filling in customer experience gaps.
A blueprint for direct media
As things have gotten more direct, they’ve also become less clear. Just look at the challenges brands face: Increased competition. Digital oversaturation. Social media destabilization. Algorithm uncertainty. Even a return of customers to the real world. The DTC media landscape is packed with challenges and opportunities for marketers to navigate.
It may be the last print-based channel growing. Or the only physical media channel offering data services. Or the last physical direct marketing channel at the table. But the attention direct mail is getting amidst this secular shift is sending a clear message that its value is anything but outmoded or fleeting. It’s an exciting time for the channel to show how well it plays with other media to anchor, enable and energize the mix. Marketers are already discovering what an easy choice the channel is and how well versed it is at delivering a direct model that connects, captivates and converts – just ask direct marketing and CTV expert Dick Wechsler, founder and CEO of Lockard & Wechsler, who says, “The future of CTV is direct mail.”
1, 2, 4 Winterberry Group, The Outlook for Advertising, Marketing and Data 2023 Report.
3 SeQuel, Direct Mail Benchmark Report, 2020.
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